How China’s chipmakers stand to gain from US curbs rollback

• Design teams at companies like SMIC, Loongson, and newer AI chip startups could once again use best-in-class US tools to simulate, verify, and optimise their chip designs.
• Among the biggest winners are China’s AI chip startups—firms like Biren Technology, Iluvatar CoreX, and Enflame, which had been frozen mid-design cycle when curbs hit.
• China’s government is expected to double down on developing homegrown EDA tools and fabrication know-how.

For nearly a year, China’s most advanced chip designers found themselves operating under a darkening cloud.

US export restrictions had cut off access to the very tools they relied on to build the next generation of semiconductors—Electronic Design Automation (EDA) software from giants like Synopsys, Cadence, and Siemens.

Without these sophisticated tools, Chinese chip firms risked falling months—if not years—behind in a race where nanoseconds count.

Then, in a sudden shift that caught many by surprise, the US quietly lifted these curbs in July 2025.

A window reopens

It wasn’t just a diplomatic gesture—it was a calculated tradeoff. In exchange for loosening EDA software restrictions, Beijing agreed to ease limits on rare earth exports and ethane chemicals critical to American manufacturing. But for China’s chip industry, it was a breath of fresh air.

Design teams at companies like SMIC, Loongson, and newer AI chip startups could once again use best-in-class US tools to simulate, verify, and optimise their chip designs.

Among the biggest winners are China’s AI chip startups—firms like Biren Technology, Iluvatar CoreX, and Enflame, which had been frozen mid-design cycle when curbs hit.

 “Losing EDA support was like coding without a compiler,” said one executive at a Shenzhen-based AI startup. “Now we’re not just moving again—we’re sprinting.”

While the short-term effects are clear—Chinese firms can build again, and US firms can sell again—the long-term story is more layered.

The rollback buys China time but doesn’t erase the strategic imperative of tech self-reliance. Beijing’s investments in domestic EDA firms like Empyrean and X-Epic are expected to double this year.

Likewise, AI hardware acceleration projects across cloud, defense, and automotive sectors are unlikely to risk another disruption—many are pursuing dual-track development with fallback domestic tools.

For China’s cloud hyperscalers, this isn’t just about silicon—it’s about sovereignty. The US software curbs had threatened to bottleneck AI growth just as GenAI adoption was booming in finance, healthcare, and government.

 “We lost a month, not a quarter,” one executive remarked. “That’s the difference between delay and disaster in this market.”

EDA tools are the brains behind chipmaking. Without them, designing a chip at 7nm or below is like trying to build a skyscraper blindfolded. Homegrown Chinese EDA software is improving, but still lags in performance, reliability, and support. The restored access means:

• Continued development of AI chips, CPUs, and networking processors without switching toolchains
• Fewer delays in R&D timelines
• Reduced pressure to overhaul entire design infrastructures

A lifeline for US vendors, too

Synopsys and Cadence, two of the world’s largest EDA firms, had been bracing for a prolonged slump in Chinese revenue—China represents over 10 per cent of their business. The lifted curbs restore not just access, but confidence in ongoing revenue streams. Wall Street, already jittery about lost licensing income, breathed a sigh of relief.

Some may see the rollback as the US blinking first. But analysts argue it’s more about avoiding mutually assured disruption. American firms don’t want to lose their most important growth market. Chinese firms, for now, still need the best tools available.

Behind the scenes, however, the gears of self-sufficiency keep turning. China’s government is expected to double down on developing homegrown EDA tools and fabrication know-how. But even optimists admit it could take 5–10 years to catch up.

The road ahead

The rollback marks a rare moment of cooperation in a tech war defined by escalation. For Chinese chipmakers, it’s a chance to catch their breath—and their competitors. For US vendors, it’s a temporary reprieve in a market that is both lucrative and politically fraught.

But make no mistake: this isn’t a permanent peace. It’s a ceasefire born of mutual need. And in the chip race, the only constant is change.